BSP minimum capital requirement for rural banks raised
By Nidz Godino
“The revised minimum capital requirements shall result in stronger and well-capitalized rural banks underpinning Philippine banking system that is stable, sound, resilient and inclusive for Filipinos,” Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla has raised minimum capital requirement for rural banks as part of efforts to boost local banking sector’s competitiveness. In a statement, central bank policy-setting Monetary Board approved amendments to minimum capitalization of rural banks.
In particular, Monetary Board approved amendments to Section 121 of Manual of Regulations for Banks (MORB) as part of Rural Bank Strengthening Program (RBSP).
“With strengthened capital base, rural banks would be able to withstand adverse financial shocks and at the same time, tap opportunities to enhance income potential, expand banking operations, and provide better credit facilities and services responsive to the needs of their clients and the banking public,” he added.
The new minimum capital levels of rural banks are P50 million for head office only and those with up to five branches;P120 million for those with six to 10 branches and P200 million for those with more than 10 branches
The previous regulations set minimum capital required for rural banks from P10 million to P200 million, depending on area of operations of head offices and branches as well as number of branches.
The BSP said in view of liberalization in branching regulations and digitalization of banking services, “the tiering of the new minimum capital requirements for rural banks only considers rural banks’ network size as indicated in number of branches (including head office) and no longer considers their area of operations.”
The central bank said affected rural banks, including those which were already authorized by Monetary Board to establish rural bank, shall be given five years to comply with new minimum capital requirements by referring to the available options under RBSP such as merger,consolidation, acquisition,third party investment, voluntary exit,upgrade of banking license, capital build-up program (CBUP), and supervisory intervention.
Rural banks availing of the capital build-up track under RBSP must submit to Bangko Sentral an acceptable CBUP within prescribed timelines, the BSP said.
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